What happens to the rights granted under the Aira Fitness Development Agreement if the developer is adjudicated bankrupt?
Aira_Fitness Franchise · 2025 FDDAnswer from 2025 FDD Document
- 7.2 You shall be in default under this Agreement, and all rights granted herein to you shall automatically terminate without notice or an opportunity to cure if:
- (a) you are adjudicated bankrupt, become insolvent, commits any affirmative action of insolvency or files any action or petition of insolvency, or if a receiver (permanent or temporary) of your property or any part thereof is appointed by a court of competent authority, or if you make a general assignment for the benefit of its creditors;
Source: Item 23 — **RECEIPTS (FDD pages 59–254)
What This Means (2025 FDD)
According to the 2025 Aira Fitness Franchise Disclosure Document, if a developer is adjudicated bankrupt, all rights granted to them under the Development Agreement will automatically terminate without notice or an opportunity to cure the default. This is a significant risk for potential Aira Fitness developers, as bankruptcy would immediately void their development rights.
This automatic termination clause is triggered by several insolvency-related events, including being adjudicated bankrupt, becoming insolvent, committing any affirmative action of insolvency, filing any action or petition of insolvency, or the appointment of a receiver for the developer's property. The inclusion of these conditions means that Aira Fitness aims to protect its interests by immediately severing ties with a developer facing financial instability.
This type of clause is relatively standard in franchising, as franchisors need to protect their brand and system from the potential damage that could arise from a financially distressed franchisee or developer. Prospective Aira Fitness developers should carefully consider this provision and ensure they have a solid financial plan to mitigate the risk of default and potential bankruptcy. They should also seek legal counsel to fully understand the implications of this clause before entering into a Development Agreement with Aira Fitness.